Hong Kong Court Refuses To Enforce A Mainland Arbitration Award For Failure Of Arbitrator To Meaningfully Engage With Arbitral Proceedings

The bench of Judge Mimmie Chan found that enforcing a Mainland award with a tribunal member absent during significant proceedings would violate Hong Kong's 'Public Policy' and principles of natural justice, as seen from an objective standpoint.

The Court held that such an award would be unenforceable under Section 95(3)(b) of the Arbitration Ordinance Cap. 609 of Hong Kong.

The Court also reiterated that mere confirmation of the award by the Mainland Court (Seat Court) would not preclude the Court where the award is sought to be enforced to deny its enforcement on the ground that it results in the violation of the public policy of the enforcing Court. It held that the public policy of the seat Court and the enforcing Court could be different.

The Court observed that the arbitral tribunal consisted of three-members and at the time of 2^nd hearing, at which the evidences were presented and submissions were made by both the parties, one member of the tribunal attended the proceedings through video conferencing. However, he was absent from the proceedings for a substantial period of time and failed to pay attention to the proceedings.

The Court observed that for the majority of the proceedings, the arbitrator could be seen moving in and out of the room, constantly engaging in other activities and admittedly appeared in a vehicle driving past a high-speed railway. Further, the arbitrator failed to respond to queries from the other members of the tribunal about his presence. It held that a perusal of the recording of the 2^nd hearing revealed that the arbitrator failed to meaningfully participate in the arbitral proceedings.

The Court held that the principles of natural justice demands that a party should not only be allowed to access the Court but also be heard carefully at the time of proceedings. It remarked that it is doubtful that an arbitrator who has failed to attend a substantial part of the hearing would be able to deliver an award backed by evidence. Moreover, it is likely to create a reasonable doubt in the mind of a reasonable objective observer that the arbitrator had already made up his mind as to the dispute before or without hearing the parties. It held that:

“51… A hearing is for the finding of facts and for a fair consideration of contrary argument, and if the arbitrator is not focused on or does not appear to be interested in that, confidence in his judgment can be impaired and a party can fairly doubt if his case has been truly heard and considered at all.

52. In my judgment, there is no apparent justice and fairness, when a member of the decision-making tribunal was not hearing and focused on hearing the parties in the course of the trial.”

Accordingly, the Court set aside the enforcement order and held that due to the egregious manner in which the arbitration was conducted, the consequent award would not be enforceable under the Hong Kong law.

Case Title: SONG LIHUA v. LEE CHEE HON, CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 111 OF 2022

Citation: [2023] HKCFI 2540

Counsel for the Applicant: Mr. Byron Chiu instructed by Grandall Zimmern Law Firm

Counsel for the Respondent: Mr. Doughlas Lam SC with Mr. David Chen instructed by DS Cheung & Co.

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